GBP/JPY turns bullish above 152 level but rally stalls on overbought conditions.
GBP/JPY has firmed up and turned more bullish after breaking above the key 152 level on December 7. However, the rally off the 150 area has now stalled at 153.40 after the market became overextended.
On the 4-hour chart the RSI reached overbought levels at 70 and due to weaker momentum in the market, GBP/JPY will likely consolidate in the near term or might even see a deeper pullback.
To the downside, strong support is now being provided at 152. If it fails to hold, then prices could fall to 150 and place the pair back into the medium-term range from late September. An extension below 150 would erase the near-term bullish bias.
For now, the risk is still skewed to the upside. As long as GBP/JPY can sustain trading above 152, then this could be the start of a new bullish phase, with scope to extend towards the 160 handle.
The bullish crossover of the 50 and 200-period moving averages are supporting the bullish outlook.
USD/CAD remains in a range from late October
USD/CAD is rising back to the upper end of its range that has been forming since late October. Momentum strength is relatively weak as can be seen by the RSI. The short-term neutral phase is expected to continue as long as the pair is capped by the 200-day moving average.
USD/CAD has been unable to make a sustained break through the 50% Fibonacci retracement level (1.2922) of the downtrend from 1.3793 to 1.2061 and has been trading below this level since July. Strong upside momentum is needed for a successful extension above what is a strong resistance zone comprised of the 50% Fibonacci, the 200-day MA and the key psychological 1.3000 level. Such a move would open the way towards 1.3500 and then re-test the 1.3793 peak.
Dips are expected to find good support near the 38.2% Fibonacci (1.2718) and the 50-day MA (1.2685). A break below this area would increase downside pressure and send prices towards the 1.2500 handle and possibly the 1.2061 low.
USD/CAD needs a catalyst to push above the range from late October but momentum is weak at the moment. Meanwhile, the underlying downtrend from 1.3793 has not shown any signs of reversing yet as long as the market remains below its 200-day MA, which is keeping the overall bearish outlook.